Preparing variable and absorption costing income statementsClaudia’s Foods produces frozen meals that it sells for $11 each. The company computes a new monthly fixed manufacturing overhead allocation rate based on the planned number or meals to be produced that month. Assume all costs and production levels are exactly as planned. The following data are from Claudia’s Foods’s first month in business:RequirementsCompute the product cost per meal produced under absorption costing and under variable costing.Prepare income statements for January 2018 using:absorption costing.variable costing.3. Is operating income higher under absorption costing or variable costing in January? January 2018Units produced and sold:Sales850 mealsProduction1,050 mealsVariable manufacturing cost per mealSales commission cost per mealTotal fixed manufacturing overhead315Total fixed selling and administrative costs450

Product cost per meal under variable costing = Variable manufacturing overhead per meal = $5 per…

Answered: January 2018 Units produced and sold:…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Preparing variable and absorption costing income statements

Claudia’s Foods produces frozen meals that it sells for $11 each. The company computes a new monthly fixed manufacturing overhead allocation rate based on the planned number or meals to be produced that month. Assume all costs and production levels are exactly as planned. The following data are from Claudia’s Foods’s first month in business:

Requirements

Compute the product cost per meal produced under absorption costing and under variable costing.
Prepare income statements for January 2018 using:

absorption costing.
variable costing.

3. Is operating income higher under absorption costing or variable costing in January?

January 2018
Units produced and sold:
Sales
850 meals
Production
1,050 meals
Variable manufacturing cost per meal
Sales commission cost per meal
Total fixed manufacturing overhead
315
Total fixed selling and administrative costs
450

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